Consider a firm Theta that spends $60 to produce goods in year 1. In year 2...

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Consider a firm Theta that spends $60 to produce goods in year 1. In year 2...

Consider a firm Theta that spends $60 to produce goods in year 1. In year 2 it sells these goods for $100, but its customers pay their bills with a delay, therefore the payment is not received until year 3. What's the amount of cost of goods sold for each year?

Multiple Choice

year 1: $0; year 2: $60; year 3: $0
year 1: $0; year 2: $0; year 3: $60
year 1: $0; year 2: $100; year 3: $0
year 1: $60; year 2: $0; year 3: $0

business finance

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Answer 1

Answer #1

Cost of goods sold = (starting inventory+ Purchase -closing inventory)

Year 1= (0+60-60)= 0

Year 2= (60+0-0)= 60

Year 3= (0+0-0)=0

Correct answer will be Option (A) Year 1:$0, Year 2:$60, Year 3:$0

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Answer 2

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